Tax Smart is a loan program that provides a federal income tax credit to qualified homebuyers. A tax credit is a direct reduction of taxes due. Under the program, a homebuyer would receive a mortgage certificate to reduce income taxes by an amount equal to 20 percent of the interest paid on a mortgage. The tax credit may be claimed each year the homebuyer continues to live in a home financed under this program.
Tax Smarts are issued to eligible homebuyers on a first-come, first-served basis. The certificates are available in connection with any type of mortgage loan (except loans from tax-exempt bond programs), including fixed rate and adjustable rate mortgages. First-time homebuyers must receive pre-purchase counseling to be eligible and must provide a certificate of completion of pre-purchase counseling with their applications.
Federal law requires that a home buyer satisfy guidelines such as must be a first-time homebuyer or purchase in a targeted area like Chicago, maximum limits on the annual gross income of the home buyer(s), limits on the purchase price of the home, home buyer must occupy the home as a principal residence within a reasonable period, each residence financed must contain 1-4 units, and the mortgage loan financed in connection with a credit certificate is required to be a new mortgage and may not replace a prior mortgage on the home (whether or not previously repaid).
Contact Chris DePaepe for more information.